The Department of Energy wants the government to acquire shares in transmission network operator National Grid Corp. of the Philippines once it proceeds with its initial public offering.
Energy Secretary Alfonso Cusi said NGCP should proceed with the IPO under Republic Act No. 9511, the law that granted the franchise to the company to engage in the business of conveying or transmitting electricity.
RA 9511 requires NGCP to list at least 20 percent of its shares in the stock market within 10 years after it started operations.
“In the franchise of NGCP, there is a certain percentage of the shares that must be tendered to the public under the IPO, and that should be done within 10-year [period], but that expired last December 2018,” Cusi said.
“So that the public will have an ownership. So what are the possibilities with that? Let’s say there is a tender offer, then the government can buy and we could have a seat in the board,” he said.
He said the government buying a stake in NGCP, the country’s lone transmission operator and grid operator, is an “option available to government and all of us.”
Cusi said NGCP sought for a one-year extension to undertake the IPO. NGCP filed its application with the Energy Regulatory Commission in December and asked for a one year extension from January 2019.
NGCP asked for a “reasonable extension of time to comply” which it said is allowed under the law.
Section 8 of the RA 9511 states that “the grantee shall list, subject to the requirements of the Securities and Exchange Commission and the Philippine Stock Exchange, and make a public offering of the shares representing at least 20 percent of its outstanding capital stock or a higher percentage that may hereafter be provided by law within 10 years from the commencements of its operations.”
The law also states that the listing in the PSE of any company which directly or indirectly owns or control at least 30 percent of the outstanding shares of the stock of the NGCP would be considered in full compliance of the listing requirement.
The law states that in case NGCP cannot comply with the listing during the 10-year period, it can file an application with the ERC for a deferment.
“In case compliance of this requirement is not reached, the Energy Regulatory Commission may upon application of the grantee, and after notice and hearing, allow such reasonable extension of the period within which the grantee should lists its shares of stock, if the market condition is not suitable for such listing,” the law states.
The National Transmission Corp., the owner of the government’s transmission asset, opposed the petition filed by NGCP for extension of the period of listing its shares of stock, saying it failed to prove that the market conditions for the listing were not ideal.
TransCo hit NGCP for the delay in complying with the IPO but NGCP said it wanted to make full use of the 10-year compliance period, adding that the government firm had no legal standing to challenge NGCP’s petition.
“NGCP had 10 years to comply with the IPO requirement. It provides no explanation or justification why it waited until almost the very end of the stipulated compliance period to formally request for an ERC extension,” TransCo said in its filing.